Thursday, 31 May 2012

Army chief slams BEML on Tatra, awards it Rs 1,500-cr deal

by Ajai Shukla

Business Standard, 31st May 12

The outgoing army chief, General V K Singh, claims he scuttled a Bharat Earth Movers Limited (BEML) bid to sell overpriced Tatra vehicles to the Indian Army. But, in February 2012, the army quietly signed a contract with BEML for an even larger and more controversial purchase: a $275-million (about Rs 1,500 crore) contract for 204 armoured recovery vehicles (ARVs).

Last week, the army chief declared in a television interview that he knew the WZT-3 ARV contract was a scam and BEML should be investigated in detail. He called the Tatra deal “a wake-up call for us to start examining other areas where things could have gone wrong”.

But in February, BEML was nominated, without bidding, for the lucrative order for additional WZT-3 ARVs. Disregarded entirely was the fact that in three previous contracts for a total of 352 WZT-3 ARVs (44 in 1999; 80 in 2002; and 228 in 2005), BEML had disregarded the contractual stipulation to indigenise the ARV. Instead, the Indian defence public sector undertaking (DPSU) imported fully built ARVs from a Polish company, Bumar, fitted cosmetic Indian components and supplied these to the army.

The WZT-3 ARVs are essentially T-72 tanks kitted for repair and recovery, rather than for fighting. Instead of a gun and turret, the T-72 is fitted with a heavy-duty crane, winch and repair equipment. This allows the ARV to travel cross-country with tank columns, repairing tanks that break down.

The purchase of these essential vehicles has been fraught with controversy. In 2003, Brigadier Inder Mohan Singh was a Deputy Director General in the Master General of Ordnance (MGO) Branch, which handles the procurement of “in-service equipment,” as the WZT-3 was since 1999. He has told Business Standard the tendering process was manipulated to ensure BEML emerged the lone bidder. The tender was sent out to only two PSUs, Bharat Heavy Electricals Ltd (BHEL) and BEML; only BEML bid. When Larsen & Toubro threw its hat in the ring, the defence ministry’s acquisitions chief ruled it out as an “unsolicited bid”. That left BEML, the single vendor, at liberty to dictate terms.

Top L&T officials verify this happened, though the company has declined to comment officially, since it had not been invited to bid.

Brig I M Singh says Ukraine then wrote in, offering their T-72 based ARV for trials. This was an attractive offer, since Ukraine was willing to use the T-72 chassis and running gear that India was already building near Chennai, while importing only the recovery gear. This, saysby Singh, would have made their ARV 30-40 per cent cheaper than the WZT-3. He put up an official proposal that the Ukrainian ARV be invited for trials, since this was a Rs 1,000-crore contract that should not go to a single bidder.

That idea was quickly shot down by the MGO himself, Lt General V K Jetley, whose brother, Colonel Virendar Jetley, had been employed by Bumar India, a joint venture between Bumar Poland and the New Delhi-based Chemon Group, headed by prominent Delhi cigar baron, Chetan Seth. “Within days, I was removed from the ARV cost negotiation committee,” says Brig Singh.

Chetan Seth, interviewed by Business Standard, confirms Col Virendar Jetley was his employee. However, he denies any influence was exercised.

Arms dealers have long sought a link with the MGO’s office, which controls a large chunk of the defence budget.

The owner of Vectra, Ravi Rishi, now under the CBI scanner in the Tatra case, employed two successive MGOs soon after they retired: Lt Gen R I S Kahlon, from the time he retired till his death last year; and Lt Gen S J S Saighal, who hit the limelight when Eurocopter, which employed his brother, Lt Gen H S Saighal, won a massive Indian contract for 197 light helicopters. The defence ministry overturned that decision after rivals protested.

With the contract for 228 WZT-3 signed in 2005, Bumar Poland began sending shiploads of ARVs to Mumbai. While BEML was supposed to indigenise these quickly, Brig I M Singh says BEML did absolutely no work on the ARVs.

“The Bumar ARVs did not even go to the BEML plant. When the ship from Poland reached Mumbai, we would send drivers to unload the ARVs. They would load the ARVs onto a train to Ordnance Depot, Kirkee, from where the frontline units would collect them,” says Brig Singh.

Chetan Seth admits the ARVs never went to BEML but claims some Indian parts would be fitted onto the ARVs in Ordnance Depot, Kirkee. “It took some time, but we indigenised drivers’ periscope sights; drivers’ adjustable seats; periscopes; and radios. We had a team of five Polish engineers in Kirkee,” avers Seth.

Approached for comments, BEML chief, V R S Natarajan, said he would respond in a press conference once the army chief retired. When pressed for answers, he asked for an emailed list of questions, to which he has not responded.

Meanwhile, another Chetan Seth company, Optic Electronics, was providing an illustration of how “indigenisation” worked in the WZT-3.

According to a senior Chetan Seth employee, Optic Electronics functioned from an SEZ in Noida, importing surplus parts from East Europe depots, touching these up, and then re-exporting them at a 500 per cent profit.

“Optic Electronics would import the day sights for each WZT-3 ARV for $5,500. These stained, often rusty, parts would be cleaned up and re-exported to Bumar Poland for around $25,000. These would then be fitted onto the WZT-3,” says the Seth employee on condition of anonymity.

Chetan Seth says he built day sights in partnership with a Polish company called PCO. He admits providing day sights for the WZT-3, but denies they were surplus parts from junkyards.

Ironically, the “indigenisation” of the WZT-3, which never crossed even 20 per cent, was being done through low-tech routes like ploughs, driver sights, towing ropes and seats, even as India was running a full T-72 tank manufacturing line at Heavy Vehicles Factory, Avadi, and building T-72 engines at the Engine Factory, Avadi.

Business Standard learned during a visit to Avadi last November that the Ordnance Factory Board (OFB) had quoted a price of Rs 40-50 lakh per engine for the WZT-3, but BEML rejected this as too high. Consequently, Bumar continues to source the engine from East Europe. The OFB’s quote has also been rejected for the latest order for 204 WZT-3 ARVs, which bodes ill for any prospect of indigenisation.

The ministry of defence has not responded to an emailed request for comments.

35 comments:

Shukla - indeed you are a journalist more than a Fauji now...what a transformation.

You are trying to project that Gen V K Singh fought selective battles. Though he ousted Tatra from purchase but still allowed other similar bogus groups to operate.

Nice observation, i think this man Gen V K Singh, would have been feed up of cleaning the system. Imagine how many of you "meat & drink" journos would have become his enemies, if by touching just tip of corruption iceberg he has plenty of enemies, at least enough to last one life term.

Shukla - take a chill pill buddy. You only said ....Thanks it is over...probably V K Singh hangover is still not over with you.

For us the Man was there, he did well, for whatever he did, he did goo and he hung his boots. Role model set for others and you are still in 'V K Singh' hangover.

Did army buy trucks or MoD? As far as I know these decisions are taken by MoD. Can an army chief approve a 1500 crore defense deal on his own? Sir, most of these facts I have come to know by avidly reading your posts. I'm your fan, please do not shake my faith in you by not being incisive enough. Shshank Srivastav

There is not even a single deal in Defense which does not have kick backs or Rishwat. From smallest to biggest.

One of my friends is a small contractor in defense. Normal guys just like all of us, loves his country and stuff but according to him, he cant do business If he does not give these kickbacks to these people sitting in defence offices, He recalls meeting (the highest) controlling authorities of contonment and gicing them rishwat just to get clearance for the work he had done.

The writer claims that the 'Army signed 1500 crore deal with BEML in Febuary 12. Implying that General VK Singh was poodle-faking! My question is, 'Does the Army sign such. Deal and how is General VK Singh culpable?'

Dont shoot the whistle blower yaar.. If it wasnt for Gen Singh pointing out the WZT issue, no one would have known about it. Its quite possible that he did not know about BEML shenanigans, and once he came to know about it, he made it public so the matter couldnt be hushed anymore.

Can you please STOP this drivel against the former chief Gen. VKS Singh ? Your title is totally misleading from the actual contents of the article. You already know this but it's not the army chief but the MOD makes procurement calls.

There you go again Mr. Shukla. Deliberately twisting facts to suit your agenda. Do you realize how much harm you may be doing by needlessly hounding an honest and brave soldier whose only fault was he had the courage to stand up against a rotting and decadeant government.If you have even a shred of integrity and conscience use your journalistic power for something constructive, not for such cheap and viscious agenda driven slander which can do so much harm. It does not befit a retired Indian Army officer.

This is a very good observation of a big loot seem to be carried out by deliberate negligence. Now it remains to be seen how our babus/officers/politicians act. The old Hindi proverb 'Asherphio ki loot coyle par chap'(Gold coins being looted while the coal rocks are being numbered for proper consumption) comes to my mind.

It was VK Singh that exposed the evil deeds of BEML. Now shukla saab has turned the story on it's head and accused VK of wrong doing. Is there something that is not for sale in India? BEML is a pathetic blood sucker of this nation's taxpayers. Their only work is to import useless products from some third rate companies and then sell that to the Indian armed forces. How low can you stoop shukla? I'm sure you can see your balls hanging in shame by now.

Sir, I've learned a lot by reading your blog regularly. This article does shows or proves anywhere in between that Gen. V K Singh pushed or approved this deal. rather, from your own writings in the past we know that it is in the hands MoD to approve such deals. Anyway could an Army Chief be solely responsible for passing this order or MoD with Dept. of Defense Production can bypass him? This is a matter to investigated by journalists like you.

Sir, I've learned a lot by reading your blog regularly. This article does shows or proves anywhere in between that Gen. V K Singh pushed or approved this deal. rather, from your own writings in the past we know that it is in the hands MoD to approve such deals. Anyway could an Army Chief be solely responsible for passing this order or MoD with Dept. of Defense Production can bypass him? This is a matter to investigated by journalists like you.

The Defense PSUs need to change their work culture. There is a general tendency to import military equipment and resist efforts of self reliance. This generates a suspicion that corrupt and anti-national forces are active and completely in control of the decision making process. Is it not very obvious that simple mechanical equipments are not developed successfully in India whereas, sophisticated systems like missiles and electronic systems banned for export to India etc. are successfully developed. I suggest that government must sell thirty three percent shares of such Defense PSUs in the market like BEML, BDL, HAL, GRSE etc. This will make them efficient, better managed and competitive. BDL is manufacturing best quality missiles but it is not exporting the same. The defense PSUs do not have a single product which is commercially successful and has earned a reputation of its own. Privatisation of Defense PSUs will bring about more transparency. Information such as number of aircrafts manufactured each year must be publicised for information of all. Whole world, except Indians like me, know the number of various types of aircrafts manufactured during last financial year by HAL.It is time to review if it is useful to keep Defense officers on the Boards of Defense PSUs. None of the Defense PSUs are performing well. My last submission is that the guilty must be punished.

These scandals never seem to shame or deter the MOD people, because they are part of the corrupt system that is preventing indigestion of defense production. We need to remove the babus from the picture completely...let the army write down the requisite QRS and local private industry with foreign partners supply the weapon systems.

Get a life Mr Shukla. You have tried to tarnish the image of Gen Singh for some time now. Your reasoning for buying F35 ( a complete flying Turkey )for Indian Air Force MMRCA was clear indication of the forces (agents)behind you.

Don't blame Ajai guys... he doesn't want to lose his access to AHQ and 'sources'. Else how will he retain his place in the Sun? Guess the sources remain the same but the 'leaks' have changed. Bet more to come on this.... Yawn!!!In any case Ajai has been a soldier and has been trained to reinforce a victory.... not a loss. Hence he has been better first off the mark to abandon a sinking ship first... others will follow, lemme tell u that!